Application of Financial Statement
August #1. Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life.
One of the major financial statements used in accounting is the income statement. The income statement is beneficial to accountants and business owners. Many will also refer to this statement as the “profit and loss statement,” “statement of operations,” or “statement of income.” Regardless of its name, it serves the same purpose and that is to show profitability of a company during a specific period of time. The period of time covered is usually chosen by ...view middle of the document...
I believe that business managers should be able to interpret this statement as it is needed to make good business decisions. In return, information from the accounting system must accurate and clear in order to effectively manage financial control. From this statement, business managers are able to identify the areas that are excelling as well as areas that may need improvement and are able to work effectively to make the necessary changes to increase revenue. I also think that the income statement allows businesses to be comparable to other firms. Understanding these statements help track the maximized profit.
#3. Discuss how your understanding of the balance sheet and income statement may be applied to your current or future position.
The income statement will be most helpful in my future position as a Project Manager because it is going to display an accurate account of how much money the company brought in via revenue and how much was spent on the expenses to keep the business running. It will also be applied to my future position because it can be used historically to keep track of how much money I spent on insurance, rent, payroll, etc and it will help in the budget process for the upcoming years. Those who need this information will be able to gather the information needed to...
